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Regulatory Comments In this comment, we address the first question presented by the Commission (“Is there a continuing need for the Rule as currently promulgated? Why or why not?”). This comment answers that question in the negative, arguing the FTC should return to the pre-2013 version of the COPPA Rule.
In this comment, we address the first question presented by the Commission (“Is there a continuing need for the Rule as currently promulgated? Why or why not?”). This comment answers that question in the negative, arguing the FTC should return to the pre-2013 version of the COPPA Rule. However, these comments also speak to several other questions, including specifically:
b. What are the aggregate costs and benefits of the Rule?
• The benefits are unclear, but the costs — in the form of restricting the ability of family- friendly content creators to monetize their products — are real.
c. Does the Rule include any provisions not mandated by the Act that are unnecessary or whose costs outweigh their benefits? If so, which ones and why?
• The 2013 amendment’s definition of personal information is not only arguably inconsistent with the statute, but also very costly in restricting targeted advertising.
2. What effect, if any, has the Rule had on children, parents, or other consumers? a. Has the Rule benefited children, parents, or other consumers? If so, how?
• The benefits to parents or children are unclear.
b. Has the Rule imposed any costs on children, parents, or other consumers? If so, what are these costs?
• The costs on children and parents are felt in less-available zero-priced online children’s content.
c. What changes, if any, should be made to the Rule to increase its benefits, consistent with the Act’s requirements? What costs would these changes impose?
• The repeal of the 2013 amendments and returning the focus of COPPA to protecting children from online threats would decrease COPPA’s costs while maximizing its benefits to society.
9. Do the definitions set forth in § 312.2 of the Rule accomplish COPPA’s goal of protecting children’s online privacy and safety?
• The definition of personal information does not clearly protect online privacy and safety, but it does impose costs on online children’s content creation.
12. The 2013 revised COPPA Rule amended the definition of “Personal information” to include, among other items, a “persistent identifier that can be used to recognize a user over time and across different websites or online services.” Has this revision resulted in stronger privacy protection for children? Has it had any negative consequences?
• There are no clear benefits to privacy in this revision, but there are negative consequences in less online children’s content creation.
In Part I, this comment argues that the 2013 amendments got the purpose of COPPA wrong in focusing on targeted advertising rather than protection from predators. In Part II, this comment explains how the 2013 changes to the definition of personal information and the YouTube enforcement action exemplify this changed focus and resulted in making the monetization of children-friendly content online much harder. Part III then analyzes the 2013 definition of personal information in a cost-benefit framework and finds the uncertain benefits to children’s privacy are outweighed by the harm to children’s content creation.
Regulatory Comments We begin our analysis of the California Consumer Privacy Act (“CCPA”) with a discussion of the standardized regulatory impact assessment (SRIA) prepared for the AG’s Office by Berkeley Economic Advising and Research, LLC.
We begin our analysis of the California Consumer Privacy Act (“CCPA”) with a discussion of the standardized regulatory impact assessment (SRIA) prepared for the AG’s Office by Berkeley Economic Advising and Research, LLC. The bottom-line cost figures from this report are staggering: $55 billion in upfront costs and $16.5 billion in additional costs over the next decade. The analysis includes large benefits as well, but as we show in the full comments, the actual costs are even higher than the SRIA estimates and the benefits fall far short of making up for those costs.
We also draw on the the early evidence coming out of the EU related to GDPR enforcement and compliance to highlight some potential pitfalls that California is facing. In particular, after its first twelve month period in force, the compliance costs were astronomical; enforcement of individual “data rights” led to unintended con- sequences; “privacy protection” seems to have undermined market competition; and there have been large unseen — but not unmeasurable — costs in forgone startup investment.
Finally, we note that, despite the DC Circuit trimming the FCC’s 2018 Restoring Internet Freedom Order, the fact remains that the FCC still retains a conflict-preemption authority to specifically preempt state laws that are incompatible with its regulations. The DC Circuit only limited the FCC’s ability to generally preempt all potentially conflicting state laws, requiring that each preemption be challenged in a fact-intensive inquiry. Similarly, it is also possible that the broad extent of the CCPA’s rules, and their impositions on firms outside of California’s borders could lead to Dormant Commerce Clause challenges. Activities that “inherently require a uniform system of regulation” or that “impair the free flow of materials and products across state borders” violate the Dormant Commerce Clause. As the FCC noted in its RIF Order, Internet-based communications is such a type of activity.
We therefore offered the following suggestions:
Continue reading the full comments
TOTM The antitrust populist ranks are chock-a-block with economists, policy wonks, and go-getter attorneys. If they are so confident in their claims of rising concentration, bad behavior, and harm to consumers, suppliers, and workers, then they should put those ideas to the test with some slam dunk litigation.
Antitrust populists have a long list of complaints about competition policy, including: laws aren’t broad enough or tough enough, enforcers are lax, and judges tend to favor defendants over plaintiffs or government agencies. The populist push got a bump with the New York Times coverage of Lina Khan’s “Amazon’s Antitrust Paradox” in which she advocated breaking up Amazon and applying public utility regulation to platforms. Khan’s ideas were picked up by Sen. Elizabeth Warren, who has a plan for similar public utility regulation and promised to unwind earlier acquisitions by Amazon (Whole Foods and Zappos), Facebook (WhatsApp and Instagram), and Google (Waze, Nest, and DoubleClick).
Read the full piece here.
TOTM This is the first in a series of TOTM blog posts discussing the Commission’s recently published Google Android decision. It draws on research from a soon-to-be published ICLE white paper.
The European Commission’s recent Google Android decision will surely go down as one of the most important competition proceedings of the past decade. And yet, an in-depth reading of the 328 page decision should leave attentive readers with a bitter taste.
TOTM The central irony of the Economists’ Hour is that in criticizing the influence of economists over policy, Appelbaum engages in a great deal of economic speculation himself. Appelbaum would discard the opinions of economists in favor of “the lessons of history,” but all he is left with is unsupported economic reasoning.
John Maynard Keynes wrote in his famous General Theory that “[t]he ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed the world is ruled by little else. Practical men who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist.”
ICLE Issue Brief Read ICLE's study by Eric Fruits and Geoffrey A. Manne, "The Antitrust Risks of Four To Three Mergers: Heightened Scrutiny of a Potential ThyssenKrupp/Kone Merger."
This study examines the heightened scrutiny of four to three mergers by competition authorities in the current regulatory environment, using the potential merger of two of the world’s largest elevator and escalator businesses — Germany’s ThyssenKrupp and Finland’s Kone — as a case study.
In recent years, regulators have become more aggressive in merger enforcement in response to populist criticisms that lax merger enforcement has led to the rise of anticompetitive “big business.” In this environment, it is easy to imagine regulators intensely scrutinizing and challenging or conditioning virtually any merger that substantially increases concentration.
The next opportunity for antitrust authorities to dispel criticism by flexing their muscles in a four to three merger review may be just around the corner. It is widely reported that ThyssenKrupp is contemplating the sale of its elevator business, with Kone as a potential buyer. This potential deal provides an opportunity to highlight the likely challenges, complexity, and cost that regulatory scrutiny of such mergers actually entails — and it is likely to be a far cry from the lax review and permissive decisionmaking of antitrust critics’ imagining.
In the case of a potential ThyssenKrupp/Kone merger, the combined entity would face lengthy, costly, and duplicative review in multiple jurisdictions, any one of which could effectively block the merger or impose onerous conditions. It would face the automatic assumption of excessive concentration in several of these, including the US, EU, and Canada. In the US, the deal would also face heightened scrutiny based on political considerations, including the perception that the deal would strengthen a foreign firm at the expense of a domestic supplier. It would also face the risk of politicized litigation from state attorneys general, and potentially the threat of extractive litigation by competitors and customers.
Whether the merger would actually entail anticompetitive risk may, unfortunately, be of only secondary importance in determining the likelihood and extent of a merger challenge or the imposition of onerous conditions.
TOTM In anticipation of the long-rumored and much-discussed sale of ThyssenKrupp’s elevator business — the International Center for Law & Economics released "The Antitrust Risks of Four To Three Mergers: Heightened Scrutiny of a Potential ThyssenKrupp/Kone Merger," by Eric Fruits and Geoffrey A. Manne.
Today, Reuters reports that Germany-based ThyssenKrupp has received bids from three bidding groups for a majority stake in the firm’s elevator business. Finland’s Kone teamed with private equity firm CVC to bid on the company. Private equity firms Blackstone and Carlyle joined with the Canada Pension Plan Investment Board to submit a bid. A third bid came from Advent, Cinven, and the Abu Dhabi Investment Authority.
TOTM This guest post is by Jonathan M. Barnett, Torrey H. Webb Professor Law, University of Southern California Gould School of Law.
It has become virtual received wisdom that antitrust law has been subdued by economic analysis into a state of chronic underenforcement. Following this line of thinking, many commentators applauded the Antitrust Division’s unsuccessful campaign to oppose the acquisition of Time-Warner by AT&T and some (unsuccessfully) urged the Division to take stronger action against the acquisition of most of Fox by Disney. The arguments in both cases followed a similar “big is bad” logic. Consolidating control of a large portfolio of creative properties (Fox plus Disney) or integrating content production and distribution capacities (Time-Warner plus AT&T) would exacerbate market concentration, leading to reduced competition and some combination of higher prices and reduced product for consumers.
Scholarship Abstract This paper is an excerpt from a larger book project called The Corporation and the Twentieth Century, which chronicles and interprets the institutional and . . .
This paper is an excerpt from a larger book project called The Corporation and the Twentieth Century, which chronicles and interprets the institutional and economic history – the life and times, if you will – of American business in the twentieth century. One integrating theme of the book is that the signal calamities of the Great Depression and World War II, as well as the policy responses to those calamities, are crucial in understanding the structure of American industry in the post-war world. This excerpt examines the role of research and development in the corporation before and during the Depression. It argues that, although corporate R&D labs did generate many important new technologies, innovations also flowed importantly from a large variety of other sources, both within the corporation (but outside of the research lab) and elsewhere in the economy. Even though corporate research did sometimes lead to new products for the corporation to exploit, a narrative in which internal R&D systematized innovation widely in the service of corporate diversification is on the whole a fable. Nonetheless, by destroying market-supporting institutions (including, importantly, sources of external finance) and by reducing the information content of price signals, the Depression did help solidify the nexus between R&D and the large corporation. Coupled with New Deal price and entry regulation in many sectors, and followed by the far greater extent of non-market controls during World War II, the Depression set the stage for the emergence of the large Chandlerian corporation of the post-war period.
